(Translation)

Securities Code:June 3, 2009

6839

NOTICE OF THE 57TH ORDINARY GENERAL MEETINGOF SHAREHOLDERS

Dear Shareholders:
Please take notice that the 57th Ordinary General Meeting of Shareholders of theCompany will be held as described below and you are cordially invited to attend the meeting.
Since voting rights can be exercised in writing even if you are not present at themeeting, please go over the Reference Document for the General Meeting of Shareholders set
forth below and send us by return mail the enclosed voting form indicating your approval ordisapproval of the propositions no later than 5:00 p.m. on June 18 (Thursday), 2009.

Yours very truly,

Tomonori Hayashi
Director, President and CEO

Funai Electric Co., Ltd.
7-1, Nakagaito 7-chome,
Daito City, OsakaDescription
1.

Date and hour:
June 19 (Friday), 2009, 10:00 a.m.

2.

Place:
5F, Multipurpose Hall, Technology Bldg. of the Company
7-1, Nakagaito 7-chome, Daito City, Osaka

3.

Matters forming the objects of the meeting:
Matters to be reported:
1.

Report on the business report, the consolidated financial statements and theresults of audit of the consolidated financial statements by the accountauditors and the Audit Committee for the 57th fiscal year (from April 1, 2008
to March 31, 2009)2.

Report on the non-consolidated financial statements for the 57th fiscal year
(from April 1, 2008 to March 31, 2009)

Matters to be resolved:
Proposition No. 1:

Amendment to the Articles of Incorporation

Proposition No. 2:

Election of seven (7) Directors

Proposition No. 3:

Issuance of stock acquisition rights as stock options- END -In attending the meeting, please present the enclosed voting form to a receptionist at the placeof the meeting.
In the event of the revision of any matter in the Reference Document for the General Meetingof Shareholders, the business report, the consolidated financial statements and thenon-consolidated financial statements, it will be posted on our Internet website(http://www.funai.jp/).

-2-

(Attached documents)
BUSINESS REPORT(April 1, 2008 to March 31, 2009)1.

Current state of the Funai Group (the "Group")(1)

Development and results of business activities:

During the consolidated fiscal year under review, economic and business conditions
deteriorated rapidly, not only in the leading industrialized countries but in newly developing
countries as well, particularly after the failure of a major U.S. investment bank in September
2008, and the global economy succumbed to a serious simultaneous slowdown as the financial
crisis, which originated in the subprime loan problem in the United States, spread from thestock markets and foreign exchange markets to the real economy.
The Japanese economy showed clearly the economic downturn as a sharp decline inexports due to the deteriorating global economy caused a substantial decrease in capital
investments, the deterioration of the employment situation and a slowdown of private
consumption.
The home electronic appliances industry also confronted a harsh environment that
included a rapid plunge in personal consumption against the backdrop of the global economic
slowdown, and prices for leading products, including LCD televisions, continued to fall.
Given such conditions, the Funai Group focused its efforts on further expanding sales
while enhancing competitiveness by reducing costs.
As a result, net sales for the fiscal year under review increased 9.2% compared withthe previous fiscal year to ¥302,777 million. A geographic breakdown of net sales indicatesthat while sales in North America, Asia and other regions exceeded the level achieved in theprevious fiscal year, sales of core LCD televisions in Europe fell below the level of theprevious fiscal year.
Although affected by stiff price competition for key products, operating income was¥1,409 million, compared with a loss of ¥2,405 million in the previous fiscal year. Ordinary
income was ¥1,226 million, compared with a loss of ¥39 million one year earlier. The net
loss for the fiscal year under review was ¥17,364 million, compared with a net loss of ¥5,376
million in the previous fiscal year. This partly reflected the recognition of ¥16,838 million as"income taxes for prior periods" in conjunction with an accounting revision based on
application of tax system for dealing with tax havens.
The following are consolidated sales by product:
Audiovisual equipment:
In the audiovisual equipment category, the Company increased sales of LCD
televisions as a result of expansion of its product lineup based on the brand licensing-3-

agreement with Royal Philips Electronics, despite the fact that the number of VCRs, CRT TVs
and DVD-related products sold continued to decline as the market contracted. Strong salesof set-top boxes* for televisions in the United States, and the full-scale introduction of Blu-ray
Disc players, for which demand is expected to grow in the future, also contributed to higher
sales. As a result, net sales of these products rose 25.2% compared with the previous fiscal
year to ¥230,600 million.
* Devices to convert digital signals into analog signals, enabling viewers to watch digital
broadcasting on existing analog televisions.
Information equipment:
Net sales of information equipment fell 30.7% year-on-year to ¥45,005 million. Salesof digital still cameras exceeded the level of the previous fiscal year, thanks to a recovery inorders from OEM partners. Sales of printers, however, declined as our OEM partners
reviewed their merchandise strategies in light of the severe competitive environment.
Others:
Net sales of other electronic devices slipped 3.0% compared with the previous fiscal
year to ¥27,171 million.
<Consolidated net sales by product>
Division
Audiovisual equipment
Information equipment
Others
Total(2)

Net sales(million yen)

Component rate(%)

230,600
45,00527,171

76.1
14.9
9.0

302,777

100.0

Investment in plant and equipment by the Group:

Investment in plant and equipment by the Group during the fiscal year under review
totaled ¥5,013 million, comprised of ¥3,977 million by its manufacturing companies and¥1,035 million by its sales companies. The amount was spent principally to improve
manufacturing facilities.
(3)

Fund-raising by the Group:
Nothing to be reported.

(4)

Issued to be tackled:

As the severe economic environment continues in the form of a simultaneous
slowdown of the global economy, in the home electronic appliances industry, the prevalenceof digital products has created new user needs and product-life cycles are becoming shorterand shorter. Hence, it has become more important to accelerate product development. On-4-the other hand, prices of manufactured goods continue to fall rapidly because of the severe
competitive environment among firms. The foremost issue for the Group is to overcome
these hard conditions and improve operating revenues. For that purpose, it is important tofurther enhance cost competitiveness, focus on creating products that will sell with anemphasis on speed to increase net sales and secure profits on a medium- and long-term basis.
The Funai Group will further enhance cost competiveness through further
improvements based on the FPS (Funai Production System), the Company's uniqueproductivity improvement system, strengthen global materials and parts purchasing
capabilities, and thoroughly review fixed and variable costs. To develop viable products thatwill be in demand, the Group must optimize the allocation of its management resources andfurther increase the speed at which it completes the series of cycles from product planning todevelopment, materials and parts purchasing, manufacturing and sales, by continuing toeffectively apply IT and minimize the time lag in each operating division. Based on thisapproach, the Group will supply products on a timely basis that accurately meet market needs.
While the Group was building up these structures, in the core LCD television business,
the Company concluded a basic brand licensing agreement in North America with Royal
Philips Electronics in April 2008. The Company has been able to expand its product line andestablish its brand position with the "Philips" and "Magnavox" names added to its existingproducts. Also, in June 2008, the Company incorporated P&F USA, INC., a distributor firmfor "Philips" brand products, to strengthen its sales structure. The Company will focus on
creating salable products that accurately meet market needs by carrying a fuller line of Blu-ray
Disc-related products and launching new high value-added products and improve profitability.
(5)
Supplementary tax assessment based on application of tax system for dealing with tax
havensOn June 16, 2008, the Company received notice of a supplementary tax assessment
from the Osaka Regional Taxation Bureau of aggregate taxation on the profits of its subsidiaryin Hong Kong for the three fiscal years ending March 31, 2005 through March 31, 2007
recognized as income of the Company, as the subsidiary in Hong Kong did not satisfy theconditions for exclusion from the application of the tax system for dealing with tax havens.
The disposition was made while the previous assessment (dated June 28, 2005) basedon the application of the tax system for dealing with tax havens was pending in the Osaka
District Court. The Company was upset about the assessment and considered it to beunacceptable, and filed a request for examination thereof with the Osaka Regional National
Tax Tribunal on August 6, 2008.
While the examination remained pending at the tribunal, three months had passed since
the Company filed the request and the Company became eligible to file a revocation lawsuit.
Accordingly, on November 14, 2008, the Company filed a lawsuit requesting the revocation of
the supplementary tax assessment with the Osaka District Court. The lawsuit, jointly withthe other lawsuit previously filed by the Company, is now pending at the court.
The additional tax payment amount was ¥15,038 million (¥16,838 million including
incidental taxes), including corporate income taxes, inhabitant taxes and enterprise taxes.
There were recognized as "income taxes for prior periods" for the fiscal year under review.
-5-

(6)

Property and income/loss:
54th(April 1, 2005 to
March 31, 2006)

55th(April 1, 2006 to
March 31, 2007)

56th(April 1, 2007 to
March 31, 2008)

57th(April 1, 2008 to
March 31, 2009)

Net sales(million yen)

360,885396,712277,167

302,777

Ordinary income (loss)(million yen)

27,461

26,591

(39)

1,226

Net income (loss)(million yen)

21,596(3,665)(5,376)(17,364)

Net income (loss) per
share (yen)620.02(107.01)(157.71)(509.33)

Total assets(million yen)

288,524

272,811

224,415

199,882

Net assets(million yen)

197,870

187,361

158,356

135,596

Net assets per share(yen)

5,752.92

5,484.38

4,630.58

3,963.72

Fiscal year
Item

(Note)(7)

Net income (loss) per share is calculated based on the average of the total numberof shares issued and outstanding during the fiscal year. Net assets per share arecalculated based on the total number of shares issued and outstanding as of theend of the fiscal year. Each such number of shares does not include the shares oftreasury stock.
Major subsidiaries:

Trade name

Ratio of equity
participation of theCompany(%)

Capital stock

DX ANTENNA Co., Ltd.

¥363 million

91.83

FUNAI CORPORTION,
INC.

US$68.5 million

100.0

Main business
Manufacture and sale ofelectronic equipment relatedwith receivers
Sale of the Company's
products

Sale of the Company's
products
Manufacture of the Company's
Funai Electric (HK) Ltd.
HK$115 million
100.0
products(Notes) 1. Each ratio of equity participation of the Company is obtained by calculating down to thethird decimal place and thereafter rounding upward or downward to the nearest second
decimal place, as the case may be.
P&F USA, INC.

US$30 million

-6-

100.0

2. P&F USA, INC. was incorporated in June 2008.

(8)

Major businesses of the Group:
Division

Principal products

Audiovisual equipment

LCD TVs, DVD players, DVD recorders, VCRs, Blu-ray Discplayers

Information equipment

Printers, digital still cameras

OthersElectronic equipment related to receivers(9)

Major business sites of the Group:
Category

Funai Electric Co., Ltd.
Japan

Sales subsidiary
Production subsidiary

Daito City, Osaka

Tokyo Branch

Chiyoda-ku, Tokyo
Hyogo-ku, Kobe City

FUNAI CORPORTION, INC.

U.S.A.

P&F USA, INC.

U.S.A.

FUNAI EUROPE GmbHGermany

Funai Electric (HK) Ltd.

Hong Kong

Employees of the Group:
Number of employees
2,590(Notes) 1.
2.

(11)

Location

Head Office

Production and sales subsidiary DX ANTENNA Co., Ltd.

Overseas

(10)

Name

As compared with the end of the previous fiscal year(+ or -) (persons)- 38

The above number of employees represents those actually at work.
The number of employees of the consignment manufacturing factories for the
fiscal year under review was 11,552, which is not included in the above numberof employees.

Major lenders
Nothing to be reported.

(12)

Other important matters concerning the current state of the Group:
Nothing to be reported.

-7-

2.

Matters concerning the shares of the Company(1)

Total number of issuable shares:

80,000,000 shares(2)

Total number of issued shares:

36,104,196 shares(including 2,011,321 shares of treasury stock)(3)

Number of shareholders:

9,195 persons(4)

Principal shareholders:Equity participation in the
Company
Number of shares(thousand shares)

Ratio of equity
participation (%)

Tetsuro Funai

12,756

37.42

Japan Trustee Services Bank, Ltd. (Trust account)

2,356

6.91

Tetsuo Funai

1,739

5.10

Funai Information Science Promotion Foundation

1,540

4.52

The Master Trust Bank of Japan, Ltd. (Trust account)

1,311

3.85

Japan Trustee Services Bank, Ltd. (Trust account 4G)

988

2.90

Danske Bank Clients Holdings

716

2.10

RBC DEXIA INVESTOR SERVICESTRUST. LONDON– LENDING ACCOUNT

613

1.80

THE CHASE MANHATTAN BANK, N.A. LONDONSECS LENDING OMNIBUSACCOUNT

418

1.23

F2 Limited Liability Company

355

1.04

T&N Limited Liability Company

355

1.04

Name

(5)

(Notes) 1.

The Company, which holds 2,011 thousand shares of treasury stock, is notincluded in the above-listed principal shareholders.

2.

Each ratio of equity participation is obtained by deducting 2,011 thousand
shares of treasury stock of the Company and calculating down to the third
decimal place and thereafter rounding upward or downward to the nearest
second decimal place, as the case may be.

Other important matters concerning shares:
Nothing to be reported.

-8-

3.

Matters concerning stock acquisition rights:(1)

Stock acquisition rights issued and outstanding at the end of the fiscal year under review:• Number of stock acquisition rights:(Note)

15,529 rights

The number of stock acquisition rights is shown by subtraction from the numberof stock acquisition rights granted, the number of stock acquisition rights
exercised and the number of stock acquisition rights that the persons entitledthereto ceased to have due to retirement.

• Class and number of shares to beissued or transferred upon exercise of
the stock acquisition rights:
1,552,900 shares of common stock(100 shares per stock acquisition right)• Stock acquisition rights held by Directors and Corporate Officers by category:
Issue

Numberof rights
48

Category

Holder

The first stock acquisitionrights for the year ending
March 31, 2003

Director
Corporate Officer

30

1

The first stock acquisitionrights for the year ending
March 31, 2004

Director

14

1

Outside Director

28

1

Corporate Officer

28

1

Corporate Officer

421

Director

24

1

The first stock acquisitionrights for the year ending
March 31, 2005
The first stock acquisitionrights for the year ending
March 31, 2006
The first stock acquisitionrights for the year ending
March 31, 2009

(Note)

Outside Director

28

Exercise price

Exercise period¥15,150

August 1, 2004 toJuly 31, 2011

¥13,646

August 1, 2005 toJuly 31, 2012¥16,167

August 1, 2006 to
July 31, 2013¥12,369

August 1, 2007 to
July 31, 2014

¥1,609August 1, 2010 toJuly 31, 2017

1
1

Corporate Officer

40

1

Corporate Officer

50

1

All the above-listed Corporate Officers are concurrently serving as Directors. However,they are not included in the Directors and are shown separately as Corporate Officers.

-9-

(2)

Stock acquisition rights delivered during the fiscal year under review:•

Stock acquisition rights resolved at the meeting of the Board of Directors held on
November 12, 2008:•

Number of stock acquisition rights:•

Class and number of shares to be issued ortransferred upon exercise of the stockacquisition rights:
431,700 shares of common stock

4,317 rights(100 shares per stock acquisitionright)•Cash to be paid for each stock acquisitionright:
No cash payment is required.

•

Amount of property to be contributed upon
exercise of stock acquisition rights:¥160,900 per right(¥1,609 per share)•

Period for the exercise of stock acquisitionrights:August 1, 2010 to July 31, 2017•

Delivery:Category

Number of rights

Number of shares
to be issued ortransferred

Number ofrecipients

Corporate Officer

50

5,000

1

4,267

426,700

325

Employee(Note) One Corporate Officer is concurrently serving as Director.

(3)

Other important matters concerning stock acquisition rights, etc.:
New share subscription rights granted as stock options during the year ending March 31,
2002 (new share subscription rights pursuant to Article 280-19 of the former Commercial
Code of Japan (the Commercial Code prior to amendment thereto made in 2001))•••

Class and number of shares to be issued
upon exercise of new share subscription
rights:311,600 shares of common stock

Amount to be paid in upon exercise of newshare subscription rights:¥9,549 per share

Period for exercising new share subscription
rights:From January 1,
December 31, 2010- 10 -

2004

to

4.

Matters concerning officers of the Company:(1)

Directors and Corporate Officers(i)Directors:
Title

Business in charge and representation of othercompanies

Name

Director

Tetsuro Funai

Member (Chairman) of the Nomination
Committee; Member of the Compensation
Committee;
Chairman of Funai Information Science
Promotion Foundation;
Chairman of Funai Scholarship Foundation

Director

Tomonori Hayashi

Chairman of the Board of Directors; Memberof the Nomination Committee, Member(Chairman) of the Compensation Committee

Director

Akitaka Inoue

Member (Chairman) of the Audit Committee

Outside Director

Mitsuo Yonemoto

Member of the Nomination Committee;
Member of the Compensation Committee

Outside Director

Morihiko Tashiro

Member of the Nomination Committee,
Member of the Audit Committee;
Member of the Compensation Committee

Outside Director

Akira Miyazaki

Member of the Nomination Committee;
Member of the Compensation Committee

Outside Director

Shigemichi Asakura

Member of the Audit Committee;
Member of the Compensation Committee

Outside Director

Yasuhisa Katsuta

Member of the Nomination Committee;
Member of the Audit Committee;
Member of the Compensation Committee;
Chairman of Osaka University of Economics

Outside Director

Hidetoshi Nishimura

Member of the Audit Committee; Member of
the Compensation Committee; Chairman of
Nissho Iwai International Exchange
Foundation(Notes) 1. Directors Tetsuro Funai and Tomonori Hayashi are concurrently serving as
Corporate Officers.
2. Member (Chairman) of the Audit Committee Akitaka Inoue, who is qualified as acertified public accountant, has considerable knowledge about financing andaccounting.

- 11 -

(ii)Corporate Officers:

Title

Business in charge andrepresentation of othercompanies
Chairman of Funai Information
Science Promotion Foundation;
Chairman of Funai ScholarshipFoundation

Name

Corporate Officer andChairman

Tetsuro Funai

Representative
Corporate Tomonori
Officer, President and CEO
Hayashi(For reference)
Corporate officers as of March 31, 2009(2)

Senior Executive Officer

Takashi Kiyomoto

Senior Executive Officer
Executive Officer

Hideo Nakai
Noriyuki Yamamoto

Executive Officer

Shinji Seki

Executive Officer

Kiyoji Katagawa

Executive Officer

Toshio Otaku

Officer
Officer

Masahiko Naito
Fumiaki Kidera

Officer

Yukio Kobayashi

Officer

Nobuhisa Uchikawa

Officer

Kenji Sakata

Officer

Susumu Nojii

Total amount of remuneration, etc. of Directors and Corporate Officers:

Director(Outside Director)

8(7)

Amount of payments(thousand yen)
55,630(37,960)

Corporate Officer
Total

4

92,525

12

148,155

Category

Number of recipients(Notes) 1. No remuneration of Directors was paid to four Directors concurrently serving as
Corporate Officers. Hence, they are not included in the number of Directors receiving
remuneration of Directors.
2. The above-listed amount of payments includes the following amount as an allowance forretirement accounts for officers deducted as expenses for the fiscal year under review:- 12 -

• ¥4,600 thousand for eight Directors (including ¥3,100 thousand for seven outside
Directors)• ¥17,000 thousand for four Corporate Officers
3. The above-listed amount of payments includes the following amount of remuneration instock options deducted as expenses for the fiscal year under review:• ¥345 thousand for one Corporate Officer
4. The above-listed recipients include three Directors (including one outside Director) who
retired from office at the close of the 56th Ordinary General Meeting of Shareholders
held on June 19, 2008.
5. In addition, retirement gratuities were paid to the officers who retired from office at theclose of the 56th Ordinary General Meeting of Shareholders held on June 19, 2008 as
follows:• ¥2,500 thousand for one outside Director• ¥15,600 thousand for two Corporate Officers(3)

Other important matters concerning officers:
Nothing to be reported.

(4)

Matters concerning Outside Directors:(i)Concurrent holding of offices of executive directors, etc. of othercorporations:•

Director Mitsuo Yonemoto is concurrently serving as Vice President andDirector of T.P.S. Laboratory Co., Ltd.
The Company has no special relationship with T.P.S. Laboratory Co., Ltd.

•

Director Akira Miyazaki is concurrently serving as Chairman and Director of
Dynamic Solutions Co., Ltd.
The Company has no special relationship with Dynamic Solutions Co., Ltd.

(ii)

Concurrent holding of offices of outside officers of other corporations:•

Director Mitsuo Yonemoto is concurrently serving as outside Director of The
Sailor Pen Co., Ltd.

•

Director Morihiko Tashiro is concurrently serving as outside Director of Inoac
Corporation and Takachiho Koheki Co., Ltd.

•

Director Akira Miyazaki is concurrently serving as outside Director of Okura
Co., Ltd.

•

Director Yasuhisa Katsuta is concurrently serving as outside Statutory Auditorof Otsuka Pharmaceutical Co., Ltd.

- 13 -

(iii)

Kinship with executive officers of the Company and specified related
enterprises:
Nothing to be reported.

(iv)•

Major activities during the fiscal year under review:
Attendance at the meetings of the Board of Directors and the Audit Committee:
Board of Directors
Name
Mitsuo Yonemoto
Morihiko Tashiro
Akira Miyazaki
Shigemichi Asakura
Yasuhisa Katsuta
Hidetoshi Nishimura•

Number ofmeetings
16
16
16
16
16
16

Numberattended
16
16
14
15
11
11

Audit Committee
Number ofmeetings

Numberattended

7

6

7
7
7

6
6
6

Speeches at meetings of the Board of Directors and the Audit Committee:
Mitsuo Yonemoto attended meetings of the Board of Directors and expressed opinions
principally from the standpoint of a management consultant.
Morihiko Tashiro attended meetings of the Board of Directors and the Audit
Committee and expressed opinions principally from the standpoint of a veteran top
executive.
Akira Miyazaki attended meetings of the Board of Directors and expressed opinions
principally from the standpoint of a veteran top executive.
Shigemichi Asakura attended meetings of the Board of Directors and the Audit
Committee and expressed opinions principally from the standpoint of a veteran top
executive.
Yasuhisa Katsuta attended meetings of the Board of Directors and the Audit
Committee and expressed opinions principally from the standpoint of a veteran top
executive, as well as the standpoint of finance and treasury.
Hidetoshi Nishimura attended meetings of the Board of Directors and the Audit
Committee and expressed opinions principally from the standpoint of a veteran top
executive.

(v)

Outline of liability limitation agreements:
In accordance with Article 427, paragraph 1 of the Corporation Law of Japan,
the Company has entered into an agreement with each of the six outside
Directors to limit the liability for any damage as provided for in Article 423,
paragraph 1 of said law within the aggregate of the amounts listed in the itemsof Article 425, paragraph 1 of said law.
- 14 -

5.

Matters concerning account auditors:(1)

Names of the account auditors:
Deloitte Touche Tohmatsu(2)

Amount of remuneration, etc. of the account auditors for the fiscal year under review:(i)(ii)(Notes)Remuneration, etc. of the account auditors for the fiscal year
under review:¥50 million

Total amount of cash and other proprietary benefits payable
to the account auditors by the Company and its subsidiaries:¥78 million

1. The amount of remuneration, etc. for audits under the Corporation Law ofJapan and the amount of remuneration, etc. for audits under the Financial
Instruments and Exchange Law of Japan are not separated in the audit
agreement between the Company and the account auditors and cannot
actually be separated. Hence, the amount in item (i) above includes bothamounts.
2. Among the major subsidiaries of the Company, FUNAI CORPORATION,
INC. and two other companies are subject to audits by audit firms (including
persons having qualifications in foreign countries equivalent to those of theaccount auditors of the Company) other than the account auditors of theCompany.

(3)

Content of non-auditing services:
The Company has paid Deloitte Touche Tohmatsu remuneration for consulting
services on establishing internal control systems, which are non-auditing services
provided for in Article 2, paragraph 1 of the Certified Public Accountant Law ofJapan.

(4)

Policy on the determination of dismissal and non-reappointment of the accountauditors:
In the event that the account auditors are found to fall under any event of dismissal
under the items of Article 340, paragraph 1 of the Corporation Law, the Audit
Committee upon unanimous consent shall dismiss the account auditors. In addition,in the event that there arises any problem with the performance by the accountauditors of their duties or the Audit Committee considers it otherwise necessary, theAudit Committee shall determine the details of a proposition for the dismissal or
non-reappointment of the account auditors to be submitted to the General Meeting of
Shareholders.

- 15 -

6.

Systems and policies of the Company(1)

Systems to secure the properness of business activities:(i)

Matters provided as necessary in the ordinances of the Ministry of Justice for
the Audit Committee to execute its duties•

Matters concerning the Directors and employees to assist the Audit Committee
to execute its duties
The Audit Office shall have employees to assist the Audit Committee to
execute its duties. The Directors who are not concurrently serving as
Corporate Officers shall cooperate with the Audit Committee in audits when
they are requested to do so.

•

Matters concerning the independence of the above-mentioned Directors andemployees from the Corporate Officers
In accordance with the "regulations concerning the employees to assist the
Audit Committee to execute its duties", the Company shall respect theopinions of the Audit Committee with regard to personnel changes in the
Audit Office and evaluations and disciplinary punishments thereof and ensure
their independence from the Corporate Officers.

•

System for reports by the Corporate Officers and employees to the Audit
Committee and other systems for reporting to the Audit Committee
The Company shall specify in the "regulations concerning reporting to the
Audit Committee" all matters to be reported to the Audit Committee andtiming, methods, etc. thereof, including facts that may inflict material damageon the Company and facts in violation of laws or ordinances or the Articles ofIncorporation.

•

Other systems to ensure effective audits by the Audit Committee
The Company shall have a full-time member or members of the Audit
Committee and allow them to regularly meet the executives, including
President and CEO, and cooperate and exchange information with the accountauditors or otherwise to ensure the effective audits by the Audit Committee.

(ii)

Establishment of systems to secure the execution by the Corporate Officers of
their duties to comply with laws or ordinances and the Articles ofIncorporation and other systems provided as necessary in the ordinances of the
Ministry of Justice to secure the properness of business activities ofcorporations•

Systems concerning storage and management of information on the execution
by the Corporate Officers of their duties
Important information shall be stored and managed in accordance with the- 16 -

"document management regulations" and shall be made available forinspection by any member of the Audit Committee designated thereby at all
times.
•

Regulations concerning management of exposure to the risk of loss and othersystems
The Company shall institute "risk management regulations" with regard to the
management of exposure to the risk of loss. Each division or department
shall manage risks to its operations and also take measures to manage riskssystematically.

•

Systems to secure efficient execution by the Corporate Officers of their duties
The Company shall have Officers under the auspices of the Corporate Officers
to ensure that the operations determined by the Corporate Officers are
performed swiftly.

•

Systems to secure the execution by the Corporate Officers and employees of
their duties to comply with laws or ordinances and the Articles ofIncorporation
In the "corporate charter of conduct" and "compliance regulations", theCompany shall clearly demonstrate how the Corporate Officers and employees
should act to comply with law to secure the execution by the Corporate
Officers and employees of their duties to comply with laws or ordinances andthe Articles of Incorporation.

•

Systems to secure the appropriateness of business activities of the corporategroup comprising a relevant corporation and its parent company andsubsidiaries
In accordance with the "related company control regulations", the Audit
Office and the Operations Control Department of the Company shall audit andgive guidance to its group companies to secure the properness of businessactivities of its corporate group.

(2)

Policies on the determination of remuneration, etc. of individual Corporate Officers,etc.
To make the determination of remuneration of Corporate Officers, etc. of theCompany appear objective and transparent to its shareholders and employees, such
remuneration is categorized into monthly remuneration payable in a fixed amounteach month, performance-linked remuneration (bonuses) payable based on
performance, year-end allowances, stock options and retirement gratuities payable
upon retirement.
(i)Remuneration, etc. of Directors- 17 -

The principal duty of Directors, who are not involved directly in execution ofindividual business, is supervision. Hence, their remuneration, etc. iscomprised of monthly remuneration, year-end allowances, stock options andretirement gratuities.
•

Monthly remuneration is determined in consideration of full-time/part-time
distinctions, standards of other companies, etc.

•

The amount of year-end allowances is determined within the upper limit on
25% of annual remuneration based on monthly remuneration, for the Directors(internal Directors) who are not outside Directors.

•

Stock options are determined by the Compensation Committee to afford
incentives to contributing to higher stock prices and much improved results.

•

Retirement gratuities are paid in an amount calculated in accordance with the"regulations of officers' retirement gratuities" established by theCompensation Committee.
Remuneration of Directors is not payable to any Director concurrently serving
as a Corporate Officer.

(ii)

Remuneration, etc. of Corporate Officers
Remuneration, etc. of Corporate Officers is comprised of monthly
remuneration, performance-linked remuneration (bonuses), stock options andretirement gratuities.

•

Monthly remuneration is determined by taking into account the position andresponsibility of each Corporate Officer, the business conditions and operating
results of the Company, standards of other companies, etc.

•

Performance-linked remuneration (bonuses) is determined according to theoperating results of the Group, the results of the operations each Corporate
Officer is responsible for, etc.

•

Stock options are determined by the Compensation Committee to afford
incentives to contributing to higher stock prices and much improved results.

•

Retirement gratuities are paid in an amount calculated in accordance with the"regulations of officers' retirement gratuities" established by theCompensation Committee.

- 18 -

(3)Policy on the determination of distribution of retained earnings, etc. by the Board of
Directors:
The Company recognizes the paying out of earnings to its shareholders as one of themost important missions of management and attaches basic importance tostrengthening its operating base and maintaining a constant payment of dividends.
In concrete terms, the Company will implement its dividend policy, based on thedividend rate of 1.0% for net assets on a consolidated basis, while taking into
consideration business conditions and other factors.

7.

Important fact concerning the state of the Company:

On October 15, 2007, the Company and its subsidiary in the United States FUNAICORPORATION, INC. filed a petition for injunction with the International Trade Commission(ITC) against 14 manufacturers and importers of digital television-related products. The
Company sought from the ITC: (i) an exclusion order prohibiting the entry into the UnitedStates of all of the accused infringers' imported digital televisions and products containing
digital televisions that are covered by the Company's digital television patents; and (ii) ceaseand desist orders directed to the accused infringers to halt them from selling such imported
digital televisions and products in the United States.
On April 10, 2009, the ITC rendered a final decision to prohibit the accused infringers
from importing and selling in the United States such digital televisions and products.
At present, it is difficult to determine the effect thereof on the income statement.

=========================================================================(Note)In this business report, amounts and the number of shares are indicated bydiscarding any fraction of the indicated unit, and rates are indicated by rounding
fractions of a half or more of the indicated unit upward and the rest downward
unless otherwise indicated. Net income per share, net loss per share and net
assets per share are indicated by rounding upward five-thousandths of one yen or
more to the nearest one-hundredth of one yen.

- 19 -

CONSOLIDATED BALANCE SHEET(As of March 31, 2009)(million yen)
ASSETS:
Current assets:

163,709

Cash on hand and in banks ...............................................................
Trade notes and trade accounts receivable ........................................
Inventories .........................................................................................
Deferred tax assets.............................................................................
Accrued refunded income taxes ........................................................
Others ................................................................................................
Allowance for doubtful accounts.......................................................

96,503
28,84430,677
2,763
1,350
3,843
(273)
36,173Fixed assets:
Tangible fixed assets:
Buildings and structures.....................................................................
Machinery, equipment and motor vehicles........................................
Tools, furniture and fixtures ..............................................................
Lands..................................................................................................
Lease assets........................................................................................
Others.................................................................................................

16,025
5,864
1,891
2,324
5,193
266
483

Intangible fixed assets
Patents ................................................................................................
Lease assets........................................................................................
Software in process ............................................................................
Others.................................................................................................

5,647

Investments and other assets:
Investment securities..........................................................................
Deferred tax assets .............................................................................
Other investments and other assets....................................................
Allowance for doubtful accounts .......................................................

14,499
5,820
4,329
5,911
(1,561)TOTAL ASSETS- 20 -

4,328
80
601
636

199,882

(million yen)
LIABILITIES:Current liabilities:
Trade notes and trade accounts payable .............................................
Short-term loans payable ....................................................................
Lease liabilities.....................................................................................
Other accounts payable.........................................................................
Accrued corporate taxes, etc.................................................................
Allowance for bonuses .........................................................................
Reserve for products guarantee .......................................................... 2
Others ...................................................................................................
Noncurrent liabilities:

60,38228,157
12,93892
12,130
1,623
302
2,191
2,944
3,904

Long-term loans payable ....................................................................
Lease liabilities.....................................................................................
Deferred tax liabilities ..........................................................................
Revaluated deferred tax liabilities ........................................................
Reserve for employee retirement benefits ............................................
Allowance for officers' retirement benefits ..........................................
Others ...................................................................................................
TOTAL LIABILITIES

666
278
26
291
1,316
1,026
298
64,286NET ASSETS:
Shareholders' equity:

150,233

Capital stock ..........................................................................................

31,280Capital surplus .......................................................................................

33,245Retained earnings...................................................................................

110,047

Treasury stock........................................................................................

(24,340)

Valuation and translation adjustments:(15,098)

Valuation difference on available-for-sale securities ............................

(98)

Foreign currency translation adjustment................................................

(14,999)

Stock acquisition rights:

17

Minority interests:

443
TOTAL NET ASSETS

135,596

TOTAL LIABILITIES AND NET ASSETS

199,882- 21 -

CONSOLIDATED STATEMENT OF INCOME(April 1, 2008 through March 31, 2009)(million yen)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:

302,777
258,30344,47343,064
1,409

Interest and dividend income
Other non-operating income
Non-operating expenses:

3,438
454

Interest expenses
Foreign exchange loss
Other
Ordinary income
Extraordinary income:Gain on prior period adjustment
Income from sale of fixed assets
Income from sale of investment securities
Other
Extraordinary loss:
Loss from disposition of fixed assets
Liquidation loss on affiliated company
Estimated loss in value of securities
Other special expenses

351
2,892
832

3,892

4,076
1,226

357
6
26
103

494

94
644
3,087
1,157

4,983

Income before income taxes

3,263
1,948
(1,335)
16,838(3,560)

Corporate, inhabitant and enterprise taxes
Refund of income taxes
Income taxes for prior periods
Income tax adjustments
Minority interests in income
Net loss

13,891
210
17,364- 22 -

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS(April 1, 2008 through March 31, 2009)(million yen)
Shareholders' equity
Capital stock
Balance as of March 31, 2008

31,280CapitalsurplusRetainedearnings

Treasury stock

129,812(24,339)

33,245

Effect of change in accounting
policies applied to foreignsubsidiaries

Total
shareholders'equity169,998

(695)

(695)

(1,704)(17,364)(1,704)(17,364)

Changes during the year
Distribution of retained earnings
Net loss
Acquisition of treasury stock

(0)

(0)

(0)
(24,340)(19,069)
150,233

StockacquisitionrightsMinority
interests

Total net
assets

-485

158,356

Changes in items other thanshareholders' equity during theyear – net
Total changes during the year--

(19,069)

Balance as of March 31, 2009

31,28033,245110,047

Balance as of March 31, 2008

Valuation and translation adjustments
Valuation
Foreign
Total
difference on
currency valuation andavailable-for- translationtranslation
sale securities adjustment adjustments(63)(12,063)(12,127)

Effect of change in accounting
policies applied to foreignsubsidiaries

122

122

(573)

Changes during the year
Distribution of retained earnings(1,704)

Net loss(17,364)

Acquisition of treasury stock(0)

Changes in items other thanshareholders' equity during theyear – net(35)(3,058)(3,093)17(41)(3,117)

Total changes during the year(35)

(3,058)(3,093)17(41)(22,187)

Balance as of March 31, 2009(98)

(14,999)(15,098)17443

135,596- 23 -NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on Matters Forming the Basis of Presentation of Consolidated Financial
Statements
1.

Scope of consolidation(1)

Number of consolidated subsidiaries:(2)

Major consolidated subsidiaries:

13

DX ANTENNA Co., Ltd., FUNAI CORPORATION, INC. and Funai Electric (HK)Ltd.
P&F USA, INC., a subsidiary incorporated during the fiscal year under review, is
included in consolidation.
(3)

Major non-consolidated subsidiary:
FGS Co., Ltd.
(Reason for exclusion from consolidation)
The non-consolidated subsidiary is a small company and its aggregate amount of total
assets, net sales, net income (based on the Company's equity interest) and retained
earnings (based on the Company's equity interest) are not material to the consolidated
financial statements.

2.

Application of equity method(1)

Number of equity-method affiliates:(2)

Names of equity-method affiliates:

2

Highsonic Industrial Ltd. and PT. DISPLAY DEVICES INDONESIA(3)

Names of major non-consolidated subsidiaries and affiliates to which the equity
method is not applicable:
Non-consolidated subsidiary:
Affiliate:

FGS Co., Ltd.
Digitec Industrial Ltd.

(Reason for exclusion from the equity method)
The non-consolidated subsidiary and affiliate have no material impact on net income(based on the Company's equity interest) and retained earnings (based on the
Company's equity interest) and generally, they are not material.
(4)

The equity-method affiliates whose fiscal year-ends differ from the end of the- 24 -

consolidated fiscal year-end, use their fiscal year ends for the financial statements.
(5)

Fiscal years of consolidated subsidiaries

The consolidated subsidiaries whose fiscal year-ends differ from the end of theconsolidated fiscal year-end are as follows:
Name

Fiscal year-end

DX ANTENNA Co., Ltd.

February 28

FUNAI ELECTRIC (MALAYSIA) SDN. BHD.

December 31

FUNAI ASIA PTE LTD.

December 31

For the above-listed consolidated subsidiaries, financial statements compiled as of
their respective fiscal year-ends are used to tabulate consolidated results. However,significant transactions that occur between that time and the consolidated fiscal
year-end are reflected in the consolidated financial statements as so required.
3.

Matters concerning accounting standards(1)

Valuation basis and methods for major assets(i)Marketable securities:
Other securities:•

Those with market value:
At market value, determined by market prices, as of the close of the fiscal
year (Revaluation differences are all transferred directly to net assets.
Selling costs are determined by the moving average method.)•Those without market value:
At cost, determined by the moving average method(ii)

Inventories:
As to the Company and its consolidated subsidiaries in Japan, finished goods
and goods in process are stated principally at cost under the gross averagemethod (the balance sheet values are calculated by the write-down method
based on declining margins). Raw materials are stated principally at cost by
the first-in, first-out method (the balance sheet values are calculated by thewrite-down method based on declining margins).
As to the overseas consolidated subsidiaries, finished goods, goods in process
and raw materials are stated principally at the lower of cost or market by the- 25 -

first-in, first-out method.
(Change of accounting policies)
As from the fiscal year under review, the "Accounting Standard for
Revaluation of Inventories" (the Accounting Standard Board of Japan("ASBJ") Corporate Accounting Standard No. 9, issued July 5, 2006) isapplicable.
The change had no material impact on the consolidated statement of income.
(2)

Method of depreciation of important depreciable assets:(i)

Tangible fixed assets (excluding lease assets):
The fixed rate method is adopted by the Company and its consolidated
subsidiaries in Japan (however, with regard to the buildings (excluding fixtures)acquired on or after April 1, 1998, the straight-line method has been adopted).
The straight-line method is adopted by the overseas consolidated subsidiaries.
The main useful lives are as follows:
Buildings and structures:
Machinery, equipment and motor vehicles:
Tools, furniture and fixtures:

3–50 years
3–7 years
1–20 years(Additional information)
The useful lives of machinery and equipment of the Company and some of its
consolidated subsidiaries in Japan, which used to be 11 years, have been changed
to seven years as of the fiscal year under review.
Upon the revisions of the tax law for the fiscal year ending March 31, 2009, theCompany reviewed the useful lives.
The change had no material impact on the consolidated statement of income.
(ii) Intangible fixed assets (excluding lease assets):
Stated by the straight-line method by the Company and its consolidated
subsidiaries in Japan. However, goodwill is depreciated equally for five years;
patents are depreciated by the straight-line method based on the estimatedeconomically usable period; and software for internal use is depreciated by thestraight-line method based on the internal usable years (five years).
(iii) Lease assets:
Lease assets related to finance lease transactions that do not transfer ownershipare depreciated by the straight-line method, based on the assumption that theuseful life equals to the lease term and the residual value equals to zero.
Any finance lease transaction that does not transfer ownership and became
effective prior to the fiscal year during which the "Accounting Standard for Lease- 26 -

Transactions" (ASBJ Corporate Accounting Standard No. 13) first became
applicable, is treated similarly to the manner in which ordinary lease transactions
are treated.
(3)

Basis for providing important allowances(i)

Allowance for doubtful accounts:
To meet losses from loan default, the Company sets aside an estimateduncollectible amount, by taking into consideration the actual loss rate in respectof general credits and the individual possibilities of collection in respect ofpossible non-performing credits and other specific claims.

(ii) Allowance for bonuses:
To meet the payment of bonuses to employees, certain consolidated subsidiaries
set aside a portion for each fiscal year of an estimated amount of bonuses to be
paid in the future.
(iii) Reserve for products guarantee:
To meet expenses of after-sales services with regard to products sold, theCompany sets aside an estimated amount based on the past record.
(iv) Reserve for employee retirement benefits:
To meet the payment of retirement benefits to employees, the Company provides
an amount, based on estimated retirement benefit obligations and plan assets as of
the close of the fiscal year.
Effects of change in accounting policies are deducted entirely as expenses for the
fiscal year during which they are first applicable. Certain consolidated
subsidiaries deduct such effects as expenses equally for 15 years.
Past service liabilities are treated as expenses, based on a straight-line basis for a
specific period of years (10 years) not exceeding the average remaining years ofservice of employees when such past service liability occurs.
Actuarial differences are treated as expenses from the next fiscal year, based on astraight-line basis for a specific period of years (10 years) not exceeding the
average remaining years of service of employees for each fiscal year during
which such differences occur.
(v) Allowance for officers' retirement benefits:
To provide for the payment of retirement benefits to officers, an amount payableat the end of the fiscal year under the Company's internal rules is reserved.
- 27 -

(4) Other significant accounting policies forming the basis of preparation of consolidated
financial statements
Accounting treatment of consumption taxes: By the tax-exclusive method
4.
Evaluation of assets and liabilities of consolidated subsidiaries on the Day Acquiring
Control Thereof
All assets and liabilities of acquired subsidiaries are evaluated by fair market value
method.
5.
Change in important matters forming the basis of preparation of consolidated
financial statements(Accounting Standard for Lease Transactions)With regard to the treatment of finance lease transactions that do not transfer
ownership, the method for lease transactions has similarly been applied. As fromthe fiscal year under review, the "Accounting Standard for Lease Transactions"(ASBJ Corporate Accounting Standard No. 13 (June 17, 1993 (ASBJ Committee Div.
1), as amended on March 30, 2007)) and the "Implementation Guidance on the
Accounting Standard for Lease Transactions" (ASBJ Implementation Guidance No.
16 (January 18, 1994 (JICPA Accounting System Committee), as amended on March
30, 2007)) are applicable and any finance lease transaction that does not transfer
ownership is treated similarly to the manner in which ordinary sales transactions aretreated.
Any finance lease transaction that does not transfer ownership, which became
effective prior to the fiscal year during which the Accounting Standard first became
applicable, will continue to be treated similarly to the manner in which ordinary leasetransactions are treated.
The change had no significant impact on the consolidated statement of income.
(Practical Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements)
As from the fiscal year under review, the "Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements" (ASBJ Practical Issues Task Force No. 18, May 17, 2006) is applicableand adjustments as required are made to the consolidated financial statements.
The change had no significant impact on the consolidated statement of income.

- 28 -

Notes to Consolidated Balance Sheet:1.

Accumulated depreciation of assets
Accumulated depreciation of tangible fixed assets:¥58,566 million

2.
In accordance with the Land Revaluation Law (Law No. 34, promulgated on March 31,
1998) of Japan, one of the consolidated subsidiaries revaluated its land used for business.
Of the revaluation difference, an amount equivalent to taxes was recognized in ¥291 million
as revaluated deferred tax liabilities. The revaluation difference, which is offset on thebalance sheet, is not presented in net assets.

Notes to Consolidated Statement of Income:Disposition of supplementary tax assessment based on the application of tax system for
dealing with tax havens
On June 16, 2008, the Company received notice of a supplementary tax assessment
from the Osaka Regional Taxation Bureau of aggregate taxation on the profits of its
subsidiary in Hong Kong for the three fiscal years ending March 31, 2005 through March 31,
2007 that were recognized as income of the Company, as the subsidiary in Hong Kong did
not satisfy the conditions for exclusion from the application of the tax system for dealing
with tax havens. The notice was received while the previous assessment (dated June 28,2005) based on the application of tax system for dealing with tax havens was pending at the
Osaka District Court. The Company was dissatisfied with the assessment and filed apetition with the Osaka Regional National Tax Tribunal on August 6, 2008. While theexamination remained pending at the tribunal, three months passed since the Company filed
the request and the Company became eligible to file a revocation lawsuit. Accordingly, on
November 14, 2008, the Company filed a lawsuit requesting revocation of the supplementary
tax assessment with the Osaka District Court. The lawsuit, jointly with the other lawsuit
previously filed by the Company, is now pending at the court.
The additional tax payment amount was ¥15,038 million (¥16,838 million including
incidental taxes), including corporate income taxes, inhabitant taxes and enterprise taxes. It
was recognized as "income taxes for prior periods" for the fiscal year under review inaccordance with the "Treatment of Accounting and Presentation of Taxes for the Purpose of
Audits" (JICPA Audit and Assurance Practice Committee Report No. 63).
The taxation is judged based on the status of any relevant foreign company at the endof each fiscal year thereof. The effects of the taxation subsequent to the tax assessment
would be estimated at approximately ¥700 million in total in corporate, inhabitant andenterprise taxes for the fiscal year ending March 31, 2008 and 2009, if the dividends received
from the subsidiary in Hong Kong for the fiscal year ending March 31, 2008 are deductedfrom taxable income. The Company has not accounted for the effects due to theaforementioned reasons.

- 29 -

Notes to Consolidated Statement of Changes in Net Assets
1.
Matters concerning the classes and total number of issued shares and the classes andnumber of shares of treasury stock(thousand shares)
Number ofshares as ofMarch 31, 2008

Increase in thenumber ofshares during
the year

36,104
36,104--

36,104
36,104

2,011

0

-

2,011

2,011

0

-

2,011

Issued shares
Shares of common stock
Total
Shares of treasury stock
Shares of common stock(Note)
Total

Decrease in thenumber of
Number ofshares during
shares as of
the yearMarch 31, 2009

(Note)The increase of treasury common stock (0 thousand) is due to the purchase ofless-than-one-unit shares.

2.

Matters concerning distribution of retained earnings(1)

Amount of dividends paid:(Resolution)

Class ofsharesTotal amountof dividends(million yen)Amount ofdividend pershare (yen)Record date

Effective
date

Meeting of theBoard of Directors
held on June 2,
2008

Shares ofcommon
stock

1,704

50

March 31,2008

June 4, 2008

(2) Dividends for which the record date falls during the fiscal year under review but theeffective date falls during the next fiscal year:

Resolution

Class ofsharesTotalamount ofdividends(million yen)

Source ofdividendsAmount ofdividend
per share(yen)

Recorddate

Effective
date

Meeting of theBoard of Directors
to be held on June
1, 2009

Shares ofcommon
stock

1,363

Retainedearnings

40

March 31,2009

June 4,2009

3.

Matters concerning stock acquisition rights

Description of stock acquisitionrightsClass of shares to be issued ortransferred upon exercise of- 30 -

Number of shares for stockacquisition rights (share)stock acquisition rights

As of March 31, 2009

The first stock acquisition rights
for the year ending March 31,
2002

Shares of common stock

311,600

The first stock acquisition rights
for the year ending March 31,
2003

Shares of common stock399,600

The first stock acquisition rights
for the year ending March 31,
2004

Shares of common stock

378,500

The first stock acquisition rights
for the year ending March 31,
2005

Shares of common stock

359,900

The second stock acquisitionrights for the year ending March
31, 2005

Shares of common stock

25,600The first stock acquisition rights
for the year ending March 31,
2006

Shares of common stock

346,400

Total(Note)

1,821,600

The first stock acquisition rights for the year ended March 31, 2002

Notes on the information per share
Net assets per share:¥3,963.72

Net loss per share:

509.33========================================================================(Note)All figures in the consolidated balance sheet, consolidated statement of income,consolidated statement of changes in net assets, and notes to consolidated
financial statements are shown by disregarding any fractions of the relevant units.
Net assets per share and net loss per share are shown by rounding upward thefive-thousandths of one yen or more to the nearest one-hundredth of one yen.

- 31 -

Copy of Account Auditors' Audit Report on Consolidated Financial Statements(TRANSLATION)
INDEPENDENT AUDITORS' REPORTMay 25, 2009
To the Board of Directors
Funai Electric Co., Ltd.
Deloitte Touche Tohmatsu
Designated Partner,
Engagement Partner,
Certified Public Accountant:
Fumihiko Kimura
Designated Partner,
Engagement Partner,
Certified Public Accountant:
Hiroshi Shirai
Designated Partner,
Engagement Partner,
Certified Public Accountant:
Masaki Mizoguchi
Pursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited theconsolidated financial statements, namely, the consolidated balance sheet as of March 31,
2009 of Funai Electric Co., Ltd. (the "Company"), and the related consolidated statements ofincome and changes in net assets, and the related notes for the 57th fiscal year from April 1,2008 to March 31, 2009. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating theoverall consolidated financial statement presentation. We believe that our audit provides areasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of the Company and consolidated subsidiaries as ofMarch 31, 2009, and the results of their operations for the year then ended in conformity withaccounting principles generally accepted in Japan.
Additional Information
As described in the notes to consolidated statement of income, disposition of a
supplementary tax assessment based upon the application of the tax system for dealing withtax havens is disclosed.
Our firm and the engagement partners do not have any financial interest in the Company forwhich disclosure is required under the provisions of the Certified Public Accountants Law.
The above represents a translation, for convenience only, of the original report issued in theJapanese language.
- END –
- 32 -

Copy of the Audit Committee's Audit Report on Consolidated Financial Statements
AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS
We, members of the Audit Committee of the Company, audited the consolidated financial
statements (the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in net assets, and the notes to consolidated financial
statements) for the 57th fiscal year from April 1, 2008 to March 31, 2009. We hereby
report the method and results thereof as follows:
1. Method of Audit and the Content thereof:
The Audit Committee, in accordance with the audit policy, assignment of duties, etc., asdetermined by the Audit Committee, received from the Corporate Officers, etc. reports on the
consolidated financial statements and demanded their explanations whenever necessary.
We also monitored and verified whether the account auditors had maintained an independent
position and conducted adequate audits, and received from the account auditors reports on
the state of performance of their duties and demanded their explanations whenever necessary.
In addition, we received from the account auditors a notice that the "systems to secureadequate performance of duties" (as listed in the items of Article 131 of the Regulations on
Corporate Accounts) had been established in accordance with the "Standard for Quality
Control Concerning Audits" (the Accounting Standards Board of Japan, October 28, 2005)
and demanded their explanations whenever necessary.
In accordance with such methods, we investigated the consolidated financial statements forthe fiscal year under review.
2. Results of Audit:
We are of the opinion that the method and results of the audit made by the Company's
account auditors, Deloitte Touche Tohmatsu, are proper.
May 25, 2009
Audit Committee
Funai Electric Co., Ltd.
Akitaka Inoue(seal)
Chairman of the Audit Committee(Note)Morihiko Tashiro
Member of the Audit Committee(seal)

Shigemichi Asakura
Member of the Audit Committee(seal)

Yasuhisa Katsuta
Member of the Audit Committee(seal)

Hidetoshi Nishimura
Member of the Audit Committee(seal)

Members of the Audit Committee Morihiko Tashiro, Shigemichi Asakura,
Yasuhisa Katsuta and Hidetoshi Nishimura are outside directors as provided for in
Article 2, item 15 and Article 400, paragraph 3 of the Corporation Law.

- 33 -

NON-CONSOLIDATED BALANCE SHEET(As of March 31, 2009)ASSETS(million yen)

Current assets:
Cash on hand and in banks ......................................................................
Trade notes receivable ...........................................................................
Trade accounts receivable ......................................................................
Finished products ...................................................................................
Raw materials .........................................................................................
Prepaid expenses......................................................................................
Deferred tax assets .................................................................................
Accrued refunded income taxes...............................................................
Others ......................................................................................................
Allowance for doubtful accounts ...........................................................

51,34018,380422
25,775
249
2,206
522
1,343
1,350
1,112
(23)

Fixed assets:
Tangible fixed assets:
Buildings ................................................................................................
Structures ...............................................................................................
Machinery and equipment .....................................................................
Motor vehicles .......................................................................................
Tools, furniture and fixtures ..................................................................
Lands ......................................................................................................
Lease assets..............................................................................................
Intangible fixed assets:
Patents ......................................................................................................
Software .................................................................................................
Lease assets..............................................................................................
Goodwill ..................................................................................................
Telephone rights ....................................................................................
Software in process ..................................................................................

57,205
9,039
3,692
76
28
1
934
4,086
219
5,327
4,328
245
49
90
12
601

Investments and other assets:
Investment securities ..............................................................................
Capital stock of associated companies ...................................................
Long-term loans receivable ...................................................................
Deferred tax assets ...................................................................................
Other investments and other assets ........................................................
Allowance for doubtful accounts ...........................................................

42,8383,141
27,162
15,197
4,449
4,720(11,833)

TOTAL ASSETS

108,545- 34 -

LIABILITIES(million yen)

Current liabilities:
Trade accounts payable ..............................................................................
Short-term loans payable ...............................................................................
Lease liabilities ..............................................................................................
Other accounts payable ................................................................................
Accrued expenses ..........................................................................................
Deposit received ............................................................................................
Reserve for products guarantee......................................................................
Others.............................................................................................................

32,49018,215
5,000
69
6,578
1,740
538
305
43

Noncurrent liabilities:
Lease liabilities ..............................................................................................
Reserve for employee retirement benefits ...................................................
Allowance for officers' retirement benefits .................................................
Allowance for liquidation loss on affiliated company...................................
Others ...........................................................................................................

2,408
212
319
1,026
784
65

TOTAL LIABILITIES

34,899NET ASSETS
Shareholders' Equity
Capital stock
Capital surplus:
Capital reserve ...............................................................................................
Other capital surplus ......................................................................................

73,72431,28033,24532,806438

Retained earnings:
Earned surplus reserve ...................................................................................
Other retained earnings..................................................................................
Reserve for deferred income tax on fixed assets ...............................
General reserve ..................................................................................
Retained earnings carried forward.....................................................

33,539209
33,330514
23,4009,415

Treasury stock(24,340)

Valuation and translation adjustments: ................................................................
Valuation difference on available-for-sale securities................................
Stock acquisition rights ...........................................................................................

(96)
(96)
17

TOTAL NET ASSETS

73,645TOTAL LIABILITIES AND NET ASSETS

108,545- 35 -

NON-CONSOLIDATED STATEMENT OF INCOME(April 1, 2008 through March 31, 2009)(million yen)
Net sales
Cost of sales
Gross profit
Sales, general and administrative expenses
Operating loss
Non-operating income:Interest and dividend income

203,890
180,469
23,421
25,046
1,625

Other
Non-operating expenses:
Interest expenses
Foreign exchange loss
Other
Ordinary income
Extraordinary income:Gain on prior period adjustment
Other
Extraordinary loss:
Loss from disposition of fixed assets
Transfer to allowance for doubtful accounts ofrelated companies
Estimated loss in value of securities
Estimated loss in value of capital stock ofassociated companies
Amount transferred to allowance for liquidation
loss on affiliated company
Other

15,933
108
49
2,783
585

357
37

16,041

3,418
10,997

395

76
2,233
2,297
811
784
922

Income before income taxes

7,124
4,268

(1,335)
16,838(2,541)

Refund of income taxes
Income taxes for prior periods
Income tax adjustments
Net income

12,961
8,693- 36 -

NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS(April 1, 2008 through March 31, 2009)(million yen)
Shareholders' equity
Retained earnings

Capital surplus
Capitalstock

Balance as of March 31, 2008

Other
capitalsurplusCapitalreserve

31,28032,806438

Other retained surplus
Reserve for
Retaineddeferredearnings
Generalincome tax
carriedreserveon fixed
forwardassetsTotal capitalsurplus

Earnedsurplusreserve

33,245209

527

23,400Total
shareholders'equityTreasury
stock

Total
retainedearnings

19,80043,937(24,339)

84,12313--

Distribution of retained
earnings(1,704)(1,704)(1,704)

Net loss(8,693)(8,693)(8,693)

Changes during the year
Reversal of reserve fordeferred income tax on
fixed assets(13)

Acquisition of treasury stock

(0)

(0)

Changes in items other thanshareholders' equity during
the year – net
Total changes during the year

-

-

-

-

-

(13)

-

(10,384)(10,397)(0)(10,398)

Balance as of March 31, 2009

31,28032,806438

33,245209

514

23,4009,415

33,539(24,340)

73,724- 37 -

(million yen)

Balance as of March 31, 2008

Valuation and translation adjustments
Valuationdifference on
Total valuation
available-for-saleand translation
securities
adjustments
(103)
(103)

Stock acquisitionrightsTotal net assets-

84,019Changes during the year
Reversal of reserve for deferredincome tax on fixed assets-

Distribution of retained earnings(1,704)

Net loss(8,693)Acquisition of treasury stock
Changes in items other thanshareholders' equity during
the year – net

(0)

6

6

17

24

Total changes during the year

6

6

17

(10,373)

Balance as of March 31, 2009

(96)

(96)

17

73,645- 38 -NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
Matters Concerning Significant Accounting Policies:
1.

Basis and method of valuation of assets(1) Basis and method of valuation of marketable securities:
Investment in subsidiaries' stock and affiliates' stock:
At cost, determined by the moving average method.
Other securities:
Those with market value:
At market value, determined by market prices, etc. as of the close of the fiscal
year (Revaluation differences are all transferred directly to capital. Selling costs
are determined by the moving average method.)Those without market value:
At cost, determined by the moving average method.

(2)

Basis and method of valuation of inventories:
Finished products:

At cost, determined by the gross average method (the balance
sheet values are calculated by the write-down method basedon declining margins).

Raw materials:

At cost, determined by the first-in, first-out method (thebalance sheet values are calculated by the write-down method
based on declining margins).

(Change of accounting policies)
As from the fiscal year under review, the "Accounting Standard for Revaluation of
Inventories" (ASBJ Corporate Accounting Standard No. 9, issued July 5, 2006) isapplicable.
The change had no material impact on the non-consolidated statement of income.
2.

Method of depreciation of fixed assets:(1) Tangible fixed assets (excluding lease assets):
Stated by the fixed rate method.
However, with regard to the buildings (excluding fixtures) acquired on or after April- 39 -

1, 1998, the straight-line method has been adopted.
(Additional information)
The useful lives of machinery and equipment, which used to be 11 years, have beenchanged to seven years as from the fiscal year under review.
Upon the revisions of the taxation for the fiscal year ended March 31, 2009, theCompany reviewed the useful lives.
The change had no material impact on the non-consolidated statement of income.
(2) Intangible fixed assets (excluding lease assets):
Stated by the straight-line method.
However, goodwill is depreciated equally for five years; patents are depreciated by
the straight-line method based on the estimated economically usable period; andsoftware for internal use is depreciated by the straight-line method based on theinternal usable years (five years).
(3)

Lease assets:
Lease assets related to finance lease transactions that do not transfer ownership are
depreciated by the straight-line method, based on the assumption that the useful life
equals to the lease term and the residual value equals to zero.
Any finance lease transaction that does not transfer ownership, which became
effective prior to the fiscal year during which the "Accounting Standard for Lease
Transactions" (ASBJ Corporate Accounting Standard No. 13) first became applicable,
is treated similarly to the manner in which ordinary lease transactions are treated.

3.

Basis for providing allowances:(1) Allowance for doubtful accounts:
To meet losses from loan default, the Company sets aside an estimated uncollectible
amount, by taking into consideration the actual loss rate in respect of general credits
and the individual possibilities of collection in respect of possible non-performing
credits and other specific claims.
(2) Reserve for product guarantees:
To meet expenses of after-sales services with regard to the products sold, theCompany sets aside an estimated amount based on the past record.

- 40 -

(3) Reserve for employee retirement benefits:
To meet the payment of retirement benefits to employees, the Company provides anamount, based on estimated retirement benefit obligations and plan assets as of theclose of the fiscal year.
Past service liability is treated as a expense, based on a straight-line basis for a
specific period of years (10 years) not exceeding the average remaining years ofservice of employees when such past service liability occurs.
Actuarial differences are treated as expenses from the next fiscal year, based on astraight-line basis for a specific period of years (10 years) not exceeding the averageremaining years of service of employees for each fiscal year during which suchdifferences occur.
(4) Allowance for officers' retirement benefits:
To provide for the payment of retirement benefits to officers, an amount payable atthe end of the fiscal year under the Company's internal rules is reserved.
(5) Allowance for liquidation loss on affiliated company:
To provide for a loss on liquidation of any affiliated company, the Company setsaside the estimated amount of such loss.
4.

Other significant accounting policies for preparation of financial statements
Accounting treatment of consumption taxes:

5.

By the tax-exclusive method

Change in matters concerning significant accounting policies(Accounting Standard for Lease Transactions)With regard to the treatment of finance lease transactions that do not transfer ownership,
the method for lease transactions has similarly been applied. As from the fiscal year
under review, the "Accounting Standard for Lease Transactions" (ASBJ Corporate
Accounting Standard No. 13 (June 17, 1993 (ASBJ Committee Div. 1), as amended on
March 30, 2007)) and the "Implementation Guidance on the Accounting Standard forLease Transactions" (ASBJ Implementation Guidance No. 16 (January 18, 1994 (JICPA
Accounting System Committee), as amended on March 30, 2007)) are applicable and any
finance lease transaction that does not transfer ownership is treated similarly to themanner in which ordinary sales transactions are treated.
Any finance lease transaction that does not transfer ownership, which became effective
prior to the fiscal year during which the Accounting Standard first became applicable,
will continue to be treated similarly to the manner in which ordinary lease transactions
are treated.

- 41 -

The change has no significant impact on the statement of income.

Notes to Non-Consolidated Balance Sheet:1.

Accumulated depreciation of assets:
Accumulated depreciation of tangible fixed assets:

2.

¥9,258 million

Money debts due from and to associated companies:
Short-term money debts due from associated companies:
Long-term money debts due from associated companies:
Short-term money debts due to associated companies:

3.

¥17,016 million¥15,669 million¥18,846 million

New share subscription rights granted as stock options:
New share subscription rights pursuant to the previous Article 280-19 of the Commercial
Code of Japan (prior to the amendment to the Commercial Code of Japan in 2001):
Date of special resolution of the General
Meeting of Shareholders:June 27, 2001

Number of new share subscription rights:-

Class and number of shares to be issued ortransferred upon exercise of new sharesubscription rights:

311,600 shares of common stock

Amount to be paid in upon exercise of newshare subscription rights:¥9,549 per share

Period of exercise of new share subscription
rights:From January 1, 2004 to December 31, 2010

Notes to Non-Consolidated Statement of Income:1.

Amount of transactions with associated companies
Trading:
Sales amount:
Purchase amount:
Other operating expenses:
Amount of transactions other than trading:¥129,358 million¥175,183 million¥2,672 million¥15,675 million

2.
Disposition of supplementary tax assessment based on the application of tax system for
dealing with tax havens- 42 -On June 16, 2008, the Company received notice of a supplementary tax assessment fromthe Osaka Regional Taxation Bureau of aggregate taxation on the profits of its subsidiary inHong Kong for the three fiscal years ending March 31, 2005 through March 31, 2007 that wererecognized as income of the Company, as the subsidiary in Hong Kong did not satisfy theconditions for exclusion from the application of the tax system for dealing with tax havens.
The notice was received while the previous assessment (dated June 28, 2005) based on theapplication of tax system for dealing with tax havens was pending at the Osaka District Court.
The Company was dissatisfied with the assessment and filed a petition with the Osaka Regional
National Tax Tribunal on August 6, 2008. While the examination remained pending at thetribunal, three months had passed since the Company filed the request and the Company became
eligible to file a revocation lawsuit. Accordingly, on November 14, 2008, the Company filed alawsuit requesting the revocation of the supplementary tax assessment with the Osaka District
Court. The lawsuit, jointly with the other lawsuit previously filed by the Company, is now
pending at the court.
The additional tax payment amount was ¥15,038 million (¥16,838 million including
incidental taxes), including corporate income taxes, inhabitant taxes and enterprise taxes. It
was recognized as "income taxes for prior periods" for the fiscal year under review in accordancewith the "Treatment of Accounting and Presentation of Taxes for the Purpose of Audits" (JICPA
Audit and Assurance Practice Committee Report No. 63).
The taxation is judged based on the status of any relevant foreign company at the end ofeach fiscal year thereof. The effects of the taxation subsequent to the tax assessment would be
estimated at approximately ¥700 million in total in corporate, inhabitant and enterprise taxes forthe fiscal year ending March 31, 2008 and 2009, if the dividends received from the subsidiary inHong Kong for the fiscal year ending March 31, 2008 are deducted from taxable income. The
Company has not accounted for the effects due to the aforementioned reasons.

Notes to Non-Consolidated Statement of Changes in Net Assets
Matters concerning the number of shares of treasury stock:（thousand shares）

Increase in shares Decrease in shares
Number of shares in the year ending in the year ending Number of shares
at March 31, 2008 March 31, 2009 March 31, 2009 at March 31, 2009
Common stock (Note)

2,011

0

-

2,011

(Note) The increase of treasury common stock (0 thousand) is due to the purchase ofless-than-one-unit shares.

- 43 -

Notes on Tax-Effect Accounting
Principal components of deferred tax assets and deferred tax liabilities(million yen)
Deferred tax assets
Reserve for employee retirement benefits
Allowance for officers' retirement gratuities
Other accounts payable
Allowance for doubtful accounts
Accrued expenses (bonuses)
Estimated loss in value of securities
Estimated loss in value of capital stock of associated companies
Amount reserved for tax assessments on specific foreignsubsidiary
Other
Subtotal
Valuation allowance
Total
Deferred tax liabilities
Reserve for deferred income tax on fixed assets
Prepaid pension expense
Subtotal
Deferred tax assets, net

129
417
785
3,512
372
260
1,135
4,659
1,117
12,390(5,646)
6,744

(352)
(599)
(952)
5,792

Notes on the Fixed Assets Used by Lease
Finance lease agreements that do not transfer ownership and which became effective onor before March 31, 2008 are treated similarly to the manner in which ordinary lease transactions
are treated.
1.

Amounts equivalent to the acquisition prices, accumulated depreciation and balance at theend of the year:

Tools, furniture and fixtures
OthersTotal:

Amount equivalent
to the acquisition
prices898
7906- 44 -(million yen)Amount equivalent Amount equivalent
to accumulated
to balance at the end
depreciationof the year
648
250
4
2
652
253

2.

Amount equivalent to the unearned rent at the end of the year
Amount equivalent to the balance of unearned rent at the end of the year
Lease within one year:
Lease exceeding one year:¥137 million¥120 million

Total:¥257 million

Transactions with Related Parties(Additional Information)
For the fiscal year under review, the "Accounting Standard for Disclosure of Related Parties"(ASBJ Corporate Accounting Standard No. 11, October 17, 2006) and the "Implementation
Guidance on the Accounting Standard for Disclosure of Related Parties" (ASBJ Implementation
Guidance No. 13, October 17, 2006) are applicable.
However, no change has occurred in the scope of disclosure of related parties.
Subsidiaries(million yen)
Voting Rights
Held byCompany (orheld byothers)

Type

Name

SubsidiaryDX
ANTENNA
Co., Ltd.

Direct,91.83%

Subsidiary

Funai Electric(HK) Ltd.

Direct, 100%

Subsidiary

FUNAI
CORPORATION INC.

Direct, 100%

Subsidiary

P&F
INC.

Direct, 100%

Subsidiary

FUNAI
ELECTRIC(POLSKA)Sp.z o.o.

Direct, 100%

Subsidiary

FUNAI
EUROPEGmbH

Direct, 100%

Subsidiary

FUNAI ASIA
PTE LTD.

Direct, 100%

USA,

RelationshipSale ofproducts of
the Company;
interlocking
directorate
Production of
products of
the Company
Sale ofproducts of
the Company;
interlocking
directorate

Transactions

Sale ofelectronic
products
Purchase ofelectronic
products
Sale ofelectronic
products

Amount oftransaction

Account
item

Balance asof March
31, 2009

8,854

Trade
accounts
receivable

3,859

160,027
102,845

Tradeaccounts
payableTradeaccounts
receivable
Other
accounts
payableTradeaccounts
receivable

15,057
5,512

Payment fordiscounts, etc.

9,101

Sale ofproducts of
the Company

Sale ofelectronic
products

5,448

Production of
products of
the Company

Sale ofelectronic
products

10,670Tradeaccounts
receivable

1,641

Loan of funds-

Long-term
loans
receivable

12,257

Loan of funds-

Long-term
loans
receivable

2,508

Sale ofproducts of
the Company;
interlocking
directorate
Sale ofproducts of
the Company- 45 -

1,681
4,534

(Note)Transaction terms and policies on the determination of transaction terms.
Like the terms of ordinary transactions, transaction terms are determined inconsideration of market prices and other factors.

Note on the information per share
Net assets per share:
Net loss per share:¥2,159.63¥254.98========================================================================•All figures in the non-consolidated balance sheet, non-consolidate statement of income,non-consolidated statement of changes in net assets, etc. and notes to non-consolidated
financial statements are shown by disregarding any fractions of the relevant units,
respectively. Net assets per share and net loss per share are shown by rounding upward
the five-thousandths of one yen or more to the nearest one-hundredth of one yen.

- 46 -

Copy of Account Auditors' Audit Report(TRANSLATION)
INDEPENDENT AUDITORS' REPORTMay 25, 2009
To the Board of Directors
Funai Electric Co., Ltd.
Deloitte Touche Tohmatsu
Designated Partner,
Engagement Partner,
Certified Public Accountant:
Fumihiko Kimura
Designated Partner,
Engagement Partner,
Certified Public Accountant:
Hiroshi Shirai
Designated Partner,
Engagement Partner,
Certified Public Accountant:
Masaki Mizoguchi
Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we haveaudited the financial statements, namely, the balance sheet as of March 31, 2009 of Funai
Electric Co., Ltd. (the "Company"), and the related statements of income and changes in net
assets, and the related notes for the 57th fiscal year from April 1, 2008 to March 31, 2009, andthe accompanying supplemental schedules. These financial statements and the accompanying
supplemental schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the accompanying
supplemental schedules based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and the accompanying supplemental schedules are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements and the accompanying supplemental
schedules. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement and theaccompanying supplemental schedules presentation. We believe that our audit provides areasonable basis for our opinion.
In our opinion, the financial statements and the accompanying supplemental schedules referred toabove present fairly, in all material respects, the financial position of the Company as of March
31, 2009, and the results of its operations for the year then ended in conformity with accounting
principles generally accepted in Japan.
Additional Information
As described in the notes to non-consolidated statement of income, disposition of a
supplementary tax assessment based upon the application of the tax system for dealing with tax
havens is disclosed.
Our firm and the engagement partners do not have any financial interest in the Company forwhich disclosure is required under the provisions of the Certified Public Accountants Law.
The above represents a translation, for convenience only, of the original report issued in theJapanese language.
- END - 47 -

Copy of the Audit Committee' Audit Report
AUDIT REPORT
We, members of the Auditor Committee of the Company, audited the performance byDirectors and Corporate Officers of their duties during the 57th fiscal year from April 1, 2008
to March 31, 2009. We hereby report the method and results thereof as follows:1.

Method of Audit and the Content thereof:

We monitored and examined the contents of the resolutions of the Board of Directors
concerning the matters as listed in Article 416, paragraph 1, item 1, b. and e. of the
Corporation Law of Japan and the state of the internal control system established thereunder,
and in accordance with the audit policy, assignment of duties, etc., as determined by the
Audit Committee and in collaboration with the internal audit sections and other sections incharge of the internal control of the Company, attended important meetings, received fromthe Directors, Corporate Officers, etc. reports on matters concerning the performance of theirduties, demanded their explanations whenever necessary, inspected important decision
documents, etc., and investigated the state of the activities and property at the head office andprincipal business offices of the Company. With regard to its subsidiaries, we maintained
constant communication and exchanged information with the directors, corporate auditors,
etc. thereof and received from the subsidiaries reports on their business operations whenevernecessary.
We also monitored and verified whether the account auditors had maintained an independent
position and conducted adequate audits, and received from the account auditors reports on thestate of performance of their duties and demanded their explanations whenever necessary.
In addition, we received from the account auditors a notice that the "systems to secureadequate performance of duties" (as listed in the items of Article 131 of the Regulations on
Corporate Accounts) had been established in accordance with the "Standard for Quality
Control Concerning Audits" (the Accounting Standards Board of Japan, October 28, 2005)
and demanded their explanations whenever necessary.
In accordance with such methods, we investigated the business report, the non-consolidated
financial statements (the non-consolidated balance sheet, the non-consolidated statement ofincome, the non-consolidated statement of changes in shareholders' equity, etc. and the notes
to non-consolidated financial statements) and their accompanying detailed statements for the
fiscal year under review.
2.

Results of Audit:(1) Results of audit of the business report, etc.:
We are of the opinion:(i)That the business report and its accompanying detailed statements present fairly thestate of the Company in accordance with laws or ordinances and the Articles ofIncorporation;(ii) That in connection with the performance by the Directors and Corporate Officers of
their duties, no dishonest act or material fact of violation of laws or ordinances or the
Articles of Incorporation exists; and- 48 -

(iii) That the details of the resolutions of the Board of Directors on internal control
systems are proper and that the performance by the Directors and Corporate Officersof their duties concerning such internal control systems contains nothing to be
pointed out.
(2) Results of audit of the non-consolidated financial statements and their accompanying
detailed statements:
We are of the opinion that the methods and results of the audit made by the account auditors,
Deloitte Touche Tohmatsu, are proper.
May 25, 2009
Audit Committee
Funai Electric Co., Ltd.
Akitaka Inoue(seal)
Chairman of the Audit Committee(Note)Morihiko Tashiro
Member of the Audit Committee(seal)

Shigemichi Asakura
Member of the Audit Committee(seal)

Yasuhisa Katsuta
Member of the Audit Committee(seal)

Hidetoshi Nishimura
Member of the Audit Committee(seal)

Members of the Audit Committee Morihiko Tashiro, Shigemichi Asakura,
Yasuhisa Katsuta and Hidetoshi Nishimura are outside directors as provided for in
Article 2, item 15 and Article 400, paragraph 3 of the Corporation Law.
- END -

- 49 -

Reference Document for the General Meeting of Shareholders
Propositions and reference information
Proposition No. 1:
1.

Amendment to the Articles of Incorporation

Reasons for the amendment:

Upon the enforcement of the "Law to Amend Part of the Law Concerning Book-Entry
Transfer of Bonds, Etc. to Streamline Settlements for Trading in Stocks, Etc." (2004 Law No.
88"), all listed shares have uniformly been placed in a book-entry system (or a sharecertificate computerized management system).
Accordingly, the Company intends to delete the provisions based on the existence ofshare certificates and make other required amendments to the existing Articles ofIncorporation, and establish required supplementary provisions as a transitional measure withregard to such amendments.
2.

Particulars of the amendment:
The particulars of the proposed amendment are set forth below:(Underlines show amendment)
Existing Articles of Incorporation

Proposed amendment(Issuance of share certificates)
The Company
Article 7.
issue certificates in respect of its shares.

(To be deleted)shall(Number of shares constituting one unit ofshares and non-issuance of certificates forless-than-one-unit shares )(Number of shares constituting one unit ofshares)The number of shares
Article 8.
constituting one unit of shares of the Company
shall be 100.

The number of shares
Article 7.
constituting one unit of shares of the Company
shall be 100.

2.
Notwithstanding the provisionof Article 7, the Company shall not issue
certificates for less-than-one-unit shares, unlessprovided for in the Share Handling Regulations.

- 50 -(To be deleted)

Existing Articles of Incorporation

Proposed amendment(Rights in respect of less-than-one-unit shares)(Rights in respect of less-than-one-unit shares)

Anyshareholder
Article 9.
(including beneficial shareholder; the same
applies hereinafter) of the Company cannot
exercise any right other than those listed below,
in respect of his/her less-than-one-unit shares:

Any shareholder of the
Article 8.
Company cannot exercise any right other thanthose listed below, in respect of his/her
less-than-one-unit shares:(1)(Descriptions omitted)(1)(Same as existing)(2)(Descriptions omitted)(2)(Same as existing)(3)(Descriptions omitted)(3)(Same as existing)(Share registrar)(Share registrar)

Article 10.
2.

(Descriptions omitted)

Article 9.

(Descriptions omitted)

2.

(Same as existing)(Same as existing)3.
The preparation and keeping of
the register of shareholders (including theregister of beneficial shareholders; the same
applies hereinafter), the register of stockacquisition rights and the register of loss ofshare certificates of the Company and otherbusiness relating to the register of shareholders,
the register of stock acquisition rights and theregister of loss of share certificates shall bedelegated to the share registrar and shall not be
handled by the Company.

3.
The preparation and keeping of
the register of shareholders and the register ofstock acquisition rights of the Company andother business relating to the register ofshareholders and the register of stockacquisition rights shall be delegated to the shareregistrar and shall not be handled by theCompany.

(Share Handling Regulations)(Share Handling Regulations)

Article 11.
The handling of theshares of the Company and the fees thereforshall be governed by the Share Handling
Regulations to be established by the Board of
Directors or the Corporate Officers as
authorized by resolution of the Board of
Directors, in addition to laws or ordinances orthese Articles of Incorporation.

The procedures for the
Article 10.
exercise of shareholders' rights and otherhandling of the shares of the Company shall begoverned by the Share Handling Regulations tobe established by the Board of Directors or the
Corporate Officers as authorized by resolutionof the Board of Directors, in addition to laws orordinances or these Articles of Incorporation.

Article 12 to Article 13 (Descriptions omitted)

Article 11 to Article 12 (Same as existing)- 51 -

Existing Articles of Incorporation

Proposed amendment(Convener and chairman)(Convener and chairman)

Article 14.

Article 13.

(Descriptions omitted)(Same as existing)2.
If the office of the President
and CEO, who shall be Director, is vacant or heis unable to act, one of the other Directors shallact in his place in the order previously
determined by the Board of Directors.

2.
If the office of the President
and CEO, who shall be Director, is vacant or heis unable to act, one of the other Directors shallact in his place in the order previously
determined by the Board of Directors.

Article 15 to Article 37 (Descriptions omitted)

Article 14 to Article 36 (Same as existing)(To be newly established)

Supplementary Provisions(To be newly established)

Article 1.
The preparation andkeeping of the register of loss of sharecertificates of the Company and otherbusinesses relating thereto shall be delegated tothe share registrar and shall not be handled by
the Company.

(To be newly established)

The preceding Article
Article 2.
and this Article shall remain effective throughJanuary 5, 2010 and shall be deleted as ofJanuary 6, 2010.

- 52 -

Proposition No. 2:

Election of seven (7) Directors

The term of office of all the (9) Directors currently in office will expire at the close ofthis Ordinary General Meeting of Shareholders. It is hereby proposed that seven (7)Directors, including five (5) outside Directors, be elected.
The candidates for Directors are as follows:

Candidate
No.

1.

Name

Brief history, business in charge and representationof other companies(Date of birth)

Tetsuro Funai

April 1951

Established Funai Sewing MachineCompany

December
1952

Representative Director of Funai
Sewing Machine Co., Ltd.

August 1961

Founding President andRepresentative Director of theCompany

June 2005

Director of the Company;
President and CEO of the Company

June 2008

Director of the Company (To date)
Chairman and Corporate Officer of
the Company (To date)(January 24, 1927)

Number ofshares of theCompany heldby Candidate

12,756,188
shares(Chairman and Representative Director of FGS Co.,Ltd.)
(Chairman of Funai Information Science Promotion
Foundation)(Chairman of Funai Scholarship Foundation)

2.

April 1969

Joined the Company

October 2002

Officer of the Company

June 2005

Executive Officer of the Company

March 2006

CEO of FUNAI CORPORATION
INC.

June 2007

Senior Executive Officer of theCompany

March 2008

General Manager of AV
Headquarters of the Company

June 2008

Director of the Company (Todate); President and CEO of theCompany (To date)Tomonori Hayashi(March 13, 1947)- 53 -

10,200 shares

Candidate
No.

3.

4.

Name

Brief history, business in charge and representationof other companies(Date of birth)

Mitsuo Yonemoto

July 1995

Vice President and Director of
T.P.S. Laboratory Co., Ltd.

September 1998

Outside Director of the Company(To date)

March 2009

Outside Director of The Sailor
Pen Co., Ltd. (To date)

April 1964

Joined Kanematsu Corporation

April 1997

Managing Director of Kanematsu
Corporation

June 1999

Vice President and Director of
Kanematsu Corporation

June 2003

Chairman and Director of
Kanematsu Electronics Ltd.

June 2004

Outside Corporate Auditor of
Daio Paper Corporation;(March 18, 1939)

Akira Miyazaki(March 13, 1939)

Number ofshares of theCompany heldby Candidate

100 shares-

Outside Director of the Company(To date)

5.

Shigemichi
AsakuraJuly 2006

Chairman and Director of
Dynamic Solutions Co., Ltd. (Todate)

June 2008

Outside Director of Okura Co.,
Ltd. (To date)

April 1957

Joined Nichimen Company
Limited (Now, Sojitz
Corporation)

February 1987

Director of Zo Jirushi Corporation

February 1991

Managing Director of Zo Jirushi
Corporation

July 2003

Representative and Senior
Managing Director of Zak!
Designs Japan Co., Ltd.

June 2004

Outside Corporate Auditor of theCompany

June 2005

Outside Director of the Company(To date)(January 1, 1934)- 54 -

200 shares

Candidate
No.

Name
(Date of birth)

Brief history, business in charge and representationof other companies
April 1965

Joined The Daiwa Bank, Limited(now Resona Bank, Limited)

June 2001

President of The Daiwa Bank,
LimitedDecember 2001

President and Representative
Director of Daiwa Gin Holdings,
Inc. (Now Resona Holdings, Inc.)
Director of Daiwa Gin Trust Bank
(Now, Resona Bank, Limited)

July 2004

Adviser of the Company

June 2005

Outside Director of the Company(To date)

June 2006

Outside Auditor of Otsuka
Pharmaceutical Co., Ltd.

July 2008

Chairman of Osaka University of
Economics (To date)

Yasuhisa Katsuta
6.

(February 20,
1942)

Number ofshares of theCompany heldby Candidate-

Chairman of Osaka University of Economics

7.

Hidetoshi
Nishimura

April 1965

Joined Nissho Company (Now,
Sojiz Corporation)

June 1994

Director of Nissho Iwai
Corporation

June 1998

Managing Director of Nissho Iwai
Corporation

June 2002

President and Representative
Director of Nissho Iwai
Corporation

April 2003

President and Representative
Director of Nissho Iwai-Nichimen
Holdings Corporation (Now Sojiz
Corporation)(April 29, 1942)
June 2005

Special Advisor of Nissho IwaiNichimen Holdings Corporation

January 2006

Advisor of the Company

June 2006

Outside Director of the Company(To date)

June 2008

Advisor of Sojiz Corporation (Todate)

Chairman of Nissho Iwai International Exchange
Foundation- 55 -

300 shares

(Note)1. Candidate for Director Mr. Tetsuro Funai is concurrently serving as Representative
Director of FGS, which has business with the Company with regard to non-life insurance.
2. Candidates for Director other than the above-mentioned persons and the Company are notspecial interested parties with regard to each other.
3. Candidates for Directors Messrs. Mitsuo Yonemoto, Akira Miyazaki, Shigemichi
Asakura, Yasuhisa Katsuta and Hidetoshi Nishimura are candidates for outside Directors.
4. Reasons for the selection of the candidate for outside Directors:
Management has judged that Mr. Mitsuo Yonemoto will be able to offer advice based on
his broad experience as a management consultant.
Management has judged that Messrs. Akira Miyazaki, Shigemichi Asakura and Hidetoshi
Nishimura will be able to use their experiences in and capabilities in corporate
management in the management of the Company.
Management has judged that Mr. Yasuhisa Katsuta will be able to use his experience inand capabilities in corporate management and banking and financing in the managementof the Company.
5. Years of service of outside Directors of the Company:
Mr. Mitsuo Yonemoto will have served as outside Director for 11 years at the close ofthis Ordinary General Meeting of Shareholders.
Mr. Akira Miyazaki will have served as outside Director for five years at the close of thisOrdinary General Meeting of Shareholders.
Mr. Shigemichi Asakura will have served as outside Director for four years at the close ofthis Ordinary General Meeting of Shareholders.
Mr. Yasuhisa Katsuta will have served as outside Director for four years at the close ofthis Ordinary General Meeting of Shareholders.
Mr. Hidetoshi Nishimura will have served as outside Director for three years at the closeof this Ordinary General Meeting of Shareholders.
6. Conclusion of liability limitation agreements:
The Company has entered into an agreement with each of the outside Directors Mitsuo
Yonemoto, Akira Miyazaki, Shigemichi Asakura, Yasuhisa Katsuta and Hidetoshi
Nishimura to limit his liability for any damage as provided for in Article 423, paragraph 1of the Corporation Law of Japan within the aggregate amount as provided for in the itemsof Article 425, paragraph 1 of the said law, pursuant to Article 427, paragraph 1 of thesaid law. If each of them is reelected, such agreement will be renewed.
7. Title and business in charge:
As stated on page 11 of the business report.

Proposition No. 3:

Issuance of stock acquisition rights as stock options

It is hereby proposed that pursuant to the provisions of Article 236, Article 238 and
Article 239 of the Corporation Law of Japan, the determination of the terms and conditions of
the offering for subscription of stock acquisition rights to be issued as stock options be left to
the Board of Directors of the Company or the Corporate Officer of the Company authorized
to do so by the resolution of the Board of Directors.
- 56 -

1.
Reason for the necessity to make an offering for subscription for stock acquisitionrights on specifically favorable conditions:
To afford incentives to and raise the morale of the Directors, Corporate Officers,
Officers and employees of the Company to contribute to achieving much improved results,
secure good human resources and promote their long-term contribution, management intends
to issue stock acquisition rights as stock options.
2.
Outline of the issuance of stock acquisition rights in respect of which the terms andconditions of the offering may be determined as authorized by resolution of this Ordinary
General Meeting of Shareholders:(1)

Qualified grantees of stock acquisition rights:
Directors, Corporate Officers, Officers and employees of the Company
Any person who will become a Director, Corporate Officer, Officer or employee after
the close of this Ordinary General Meeting of Shareholders shall be included among
the qualified grantees of stock acquisition rights.

(2)

Class and number of shares to be issued or transferred upon exercise of stockacquisition rights:
The class of shares to be issued or transferred upon exercise of stock acquisitionrights shall be shares of common stock of the Company and the number of shares tobe so issued or transferred for each stock acquisition right shall be 100 shares.
In the event that the Company makes a stock division (which shall include scrip
issues; the same applies hereinafter) or stock consolidation which shall become
effective after the close of this Ordinary General Meeting of Shareholders, the said
number of shares to be issued or transferred upon exercise of the stock acquisitionrights shall be adjusted in accordance with the following formula. Such adjustment
shall be made only to the number of shares in respect of which the said stockacquisition rights have not been exercised by then, with any fraction of one shareoccurring upon such adjustment discarded.
Number of shares asadjusted=

Number of shares
before adjustment

×

Division (or consolidation) ratio

In addition, in the event that the Company undertakes a merger, consolidation,
corporate division to transfer business or incorporate a corporation, share exchange orshare transfer which shall become effective after the close of this Ordinary General
Meeting of Shareholders or otherwise for any inevitable reason, the said number ofshares to be issued or transferred upon exercise of the stock acquisition rights shall be
adjusted to a reasonable extent.

- 57 -

(3)Maximum number of stock acquisition rights:
Not exceeding 8,200 rights. The total number of shares to be issued or transferred
upon exercise of stock acquisition rights shall not exceed 820,000 shares of common
stock of the Company; provided, however, that in the event of an adjustment to thenumber of shares as set forth in paragraph (2) above, the total number of shares to beissued or transferred upon exercise of stock acquisition rights shall also be adjusted
accordingly.

(4)

Cash to be paid in for stock acquisition rights:
No cash shall be required to be paid in for stock acquisition rights.

(5)

Amount of property to be contributed upon exercise of a stock acquisition right or the
method of determination thereof:
The amount of property to be contributed upon exercise of a stock acquisition rightshall be an amount obtained by multiplying the paid-in amount per share to be
determined below (the "Exercise Price"), multiplied by the number of shares to beissued or transferred for each stock acquisition right as set forth in paragraph (2)above.
The Exercise Price shall be the higher of (i) an amount obtained by multiplying by
1.05 the average of the daily closing prices (the "Closing Price") (regular way) of theshares of common stock of the Company on Osaka Securities Exchange Co., Ltd. forthe days (exclusive of any day on which transactions are not validly made) of themonth immediately preceding the month under which the date on which the stockacquisition rights shall be allocated (the "Allotment Date") falls (with any fraction of
one yen rounded upward to the nearest one yen) and (ii) the Closing Price on the
Allotment Date (if the Closing Price is not available on that day, the Closing Price on
any day immediately preceding that day).
In the event that the Company makes a stock division or stock consolidation whichshall become effective after the close of this Ordinary General Meeting of
Shareholders, the said Exercise Price shall be adjusted in accordance with thefollowing formula, with any fraction of one yen occurring upon such adjustment
rounded upward to the nearest one yen:

Exercise Price as adjusted=

Exercise Price
beforeadjustment

×1
Division (or consolidation) ratio

In the event that the Company issues new shares or disposes of its shares of treasury
stock at a price lower than the current market price (exclusive of the issuance of newshares or the disposition of its shares of treasury stock upon exercise of stockacquisition rights or exercise of rights to subscribe for new shares pursuant to theprovision of Article 280-19, paragraph 1 of the Commercial Code prior to the- 58 -

enforcement of the Law to Amend Part of the Commercial Code, Etc. (2001 Law No.
128)), the said Exercise Price shall be adjusted in accordance with the following
formula, with any fraction of one yen occurring upon such adjustment rounded
upward to the nearest one yen:

Exercise Price asadjusted=

Number of+
already issued
ExercisesharesPrice×
beforeNumber of+adjustment
already issued
sharesNumber of
newly issued
× Paid-in pricesharesper share
Current market price before theissuance of new shares
Number of newly issued shares

In the above calculation formula, "Number of already issued shares" represents thenumber of shares obtained by deducting the number of shares of treasury stock of theCompany in respect of the shares of common stock of the Company from the total
number of shares of common stock of the Company issued and outstanding, and in theevent that the shares of treasury stock are disposed of in respect of the shares ofcommon stock of the Company, "Number of newly issued shares" shall be read
"Number of shares of treasury stock disposed" and "Paid-in price per share" shall beread "Disposal price per share".
In addition, in the event that the Company undertakes a merger, consolidation,
corporate division to transfer business or incorporate a corporation, share exchange orshare transfer which shall become effective after the close of this Ordinary General
Meeting of Shareholders or otherwise for any inevitable reason, the said Exercise Priceshall be adjusted to a reasonable extent.
(6)

Exercise period of the stock acquisition rights:
From August 1, 2011 to July 31, 2018; provided, however, that if the final day of such
period falls on a holiday of the Company, the immediately preceding business day
shall be the final day.

(7)

Terms and conditions of the exercise of stock acquisition rights:(i)

The number of stock acquisition rights exercisable by any person entitled toexercise stock acquisition rights in any given year (from August 1 through July
31 of the following year) during the period for exercising stock acquisition rights
shall be governed by the rule to be established by the Board of Directors.
If any person entitled to exercise his/her stock acquisition rights does not
exercise all or any part of his/her rights exercisable in any given year during theperiod for exercising stock acquisition rights, the rights remaining unexercisedin such any given year may be carried over to any subsequent year until the
period for exercising stock acquisition rights expires.

- 59 -

(ii) Any person entitled to exercise stock acquisition rights who is a director,
corporate officer, statutory auditor, accounting officer, executive officer or
employee of the Company or any of its related companies shall not be entitled toexercise his/her rights in any given year (from August 1 through July 31 of thefollowing year) during the period for exercising stock acquisition rights set forthin paragraph (6) above unless he/she obtains approval from the Company in suchgiven year.
(iii) If any person entitled to exercise stock acquisition rights who is a Director,
Corporate Officer, executive officer or employee of the Company ceases to be adirector, corporate officer, statutory auditor, accounting officer, executive officer
or employee of the Company or any of its related companies, he/she shall not be
entitled to exercise his/her stock acquisition rights.
(iv) If any person entitled to exercise his/her stock acquisition rights dies, his/herheir may succeed to the stock acquisition rights.
(8)Matters concerning capital and capital reserve to be increased in the event that theCompany issues shares upon exercise of the stock acquisition rights:(i)

In the event that the Company issues shares upon exercise of the stockacquisition rights, the amount of capital to be increased shall be a half of the
maximum increase amount of capital calculated pursuant to Article 17,
paragraph 1 of the Regulations on Corporate Accounts, with any fraction of
one yen rounded upward to the nearest one yen.

(ii) In the event that the Company issues shares upon exercise of the stockacquisition rights, the amount of capital reserve to be increased shall be an
amount obtained by deducting the amount of capital to be increased as set forthin item (i) above from the maximum increase amount of capital set forth initem (i) above.
(9)

Events of acquisition of stock acquisition rights:(i)

In the event that before any person entitled to exercise stock acquisition rights
exercises his/her rights, a proposition for the approval of a merger agreement
under which the Company shall be merged, or a proposition for the approval ofa share exchange agreement or a share transfer plan under which the Company
shall become a wholly-owned subsidiary is approved at a General Meeting of
Shareholders (or a resolution therefor is adopted by the Board of Directors of
the Company when such resolution of the General Meeting of Shareholders is
not required), the Company may acquire the stock acquisition rights without
consideration on a day separately specified by its Board of Directors.

- 60 -

(ii) In the event that before any person entitled to exercise stock acquisition rights
exercises his/her rights, he/she ceases to be entitled to do so due to any of theterms and conditions set forth in paragraph (7) above, the Company may
acquire the stock acquisition rights without consideration on a day separately
specified by its Board of Directors.
(iii) In the event that any person entitled to exercise stock acquisition rights waives
all or any part of his/her rights, the Company may acquire the stock acquisitionrights without consideration on a day separately specified by its Board of
Directors.
(10)

Treatment of stock acquisition rights upon reorganization by the Company:
In the event that the Company is merged or consolidated (as a result of which, theCompany shall be dissolved), is divided to transfer business or incorporate a
corporation, does a share exchange or does a share transfer (collectively,"reorganization"), the Company shall deliver to any person entitled to exercise thestock acquisition rights outstanding (the "Outstanding Rights") on the day on which
the reorganization becomes effective, stock acquisition rights of relevant corporations("reorganizing companies") listed in Article 236, paragraph 1, items 8 (a) through (e)of the Corporation Law, in accordance with the following terms and conditions. In
such case, the Outstanding Rights shall become null and void and the reorganizing
companies shall issue new stock acquisition rights, only if and when the delivery ofstock acquisition rights of the reorganizing companies in accordance with thefollowing terms and conditions is stipulated in the relevant merger agreement,
consolidation agreement, agreement of corporate division to transfer business, planfor corporate division to incorporate a company, share exchange agreement or sharetransfer plan:(i)

Number of stock acquisition rights of reorganizing company to be delivered:
The same number as that of the stock acquisition rights held by each person
entitled to exercise the Outstanding Rights(ii) Class of shares of reorganizing company to be issued or transferred upon
exercise of stock acquisition rights:
Shares of common stock of the reorganizing company(iii) Number of shares of reorganizing company to be issued or transferred upon
exercise of stock acquisition rights:
The number of shares shall be determined in accordance with paragraph (2)above, taking into account the terms and conditions of the reorganization.

- 61 -

(iv) Amount of property to be contributed upon exercise of a stock acquisitionright:
The amount of property to be contributed upon exercise of each stockacquisition right to be delivered shall be an amount obtained by multiplying
by the number of shares of the reorganizing company to be issued ortransferred upon exercise of each such stock acquisition right determined as
set forth in item (iii) above, the paid-in amount after the reorganization
obtained by adjustment to the Exercise Price set forth in paragraph (5) aboveby taking into account the conditions of the reorganization.
(v) Exercise period of stock acquisition rights:
From the later of the first day of the exercise period of stock acquisition rights
set forth in paragraph (6) above and the day on which the reorganization
becomes effective, to the last day of the exercise period of stock acquisitionrights set forth in paragraph (6) above.
(vi) Terms and conditions of the exercise of stock acquisition rights:
To be determined in accordance with paragraph (7) above.
(vii) Matters concerning capital and capital reserve to be increased in the event thatshares are issued upon exercise of the stock acquisition rights:
To be determined in accordance with paragraph (8) above.
(viii) Restriction on acquisition of stock acquisition rights by transfer:Any acquisition of stock acquisition rights by transfer shall be subject to theapproval of the reorganizing company.
(ix) Events of acquisition of stock acquisition rights:
To be determined in accordance with paragraph (9) above.
(11)

Restriction on acquisition of the stock acquisition rights by transfer:Any acquisition of the stock acquisition rights by transfer shall be subject to theapproval of the Board of Directors of the Company.

(12)

Treatment of fractions of a share upon exercise of the stock acquisition rights:
For the purpose of delivery of shares to any person entitled to exercise stockacquisition rights who exercises his/her rights, any fraction of one share shall bediscarded.
- END -

- 62 -